Trade Forex Trading

Accounts - Accounts Types Explained - Account Explanation

2 Types of Accounts - Standard Account & Micro Account

A fake practice account is a basic account given by brokers to help new traders learn to trade using this account, which is known as a practice account. This fake account helps new traders practice trading online using this account, also known as a practice account. New traders also use this fake practice account to learn how the broker's trading software works.

In recent times, retail share trading has experienced a massive surge in popularity, leading to increased demand for diverse account types. Numerous account options are available to any participant wishing to deploy capital in the global forex market (see Account Explanation).

The forex market lets people bet on and try to make money from changes in currency values using a lot of borrowed money. Traders can buy a lot of currency with only a little of their own money because of leverage. Many online traders like leverage because it can increase both profits and losses since they borrow most of the money.

There are different kinds of accounts available to help investors and online traders manage their money and their trades better.

Forex traders should think about their goals first. Then choose the right account type.

This compares two common account types for currency trading. The review details each type's features.

1. Standard Accounts Explained - Standard Accounts Types Described

Account explanation: Standard Account. A Standard Trade Account is in US Dollars and uses standard lots - one lot equals 100,000 currency units. People also call one lot a contract. You'll need at least $10,000 to open a standard account.

1 contract and lot refers to the minimum size of a single trade transaction. This account option is the most suitable for investors with enough capital to invest in forex - this account option requires $10,000 to $50,000 in beginning capital, for this standard account the investor won't be undercapitalized & with good forex money management principles and forex equity management methods, this standard account option has the best chance for profitability because it's not under capitalized. Under capitalization is what makes most investors in forex not profitable.

It's not a good idea to start a standard trading account if you don't have between $10,000 and $50,000 in your account.

Professional money managers advise a minimum of $50,000 to start this regular account and only opening one or two lots at the most for every $50,000 in your account. Nevertheless, if you, the trader, have more than $10,000, the majority of internet brokers will still register this standard account for you.

If an exchange rate for EUR/USD is quoted at 1.4000, then the smallest and minimum trade available in a standard account is worth $140,000 dollars of currency to buy 100,000 EUR. With leverage of 100:1, this is only $1,400 of your money & the rest of the money you'll borrow from your broker (with forex leverage ratio of 100:1, your broker gives you $100 for every $1 that you have, therefore for this trade transaction using only $1,400 of your trading capital, the broker will give you $100 of leverage for every $1 you have, meaning after leverage you'll have $1,400*100=$140,000 which you then can buy 1 standard contract/lot of EUR USD).

For Standard Lots Minimum Price Movement of 1 pip = $10

2. Micro Account Explanation - Micro Accounts Types Described

Account Explanation - Micro Account. Micro Accounts use lot sizes of only 1,000 currency units. These Micro accounts are often appropriate for investors & traders without a lot of capital & sometimes can be opened with only a $5 minimum balance.

Micro account options are ideal for equity balances ranging between $1,000 and $5,000, offering suitable trading conditions

With a Micro account, a trader is able to make very small trades. A forex micro lot/contract is one-tenth the size of a mini lot, and one-hundredth of a standard lot.

If an exchange rate for EUR/USD is quoted at 1.400, then the smallest and minimum trade available in a micro account is worth $1,400 used to buy 1,000 EUR. With leverage, this is only $14 of your money and the rest of the money you'll borrow from your broker (with forex leverage ratio of 100:1, your broker provides you $100 for every $1 dollar which you have, therefore for this trade position using only $14 of your trade capital, the online broker gives you $100 of leverage for every $1 dollar you have, meaning after leverage you will have $14*100=$1,400 which you can then buy 1 micro lot of EURUSD).

For Micro account - Minimum Price Movement of 1 pip = $0.1

In Forex, 1 contract is the standard trade minimum of a given forex currency pair. But many brokers offer fractions of this standard lot to enable more retail investors to access the market. Being able to offer forex micro contracts/lots reduces the minimum trade transaction size thus giving the beginners and also those traders without a lot of capital to start investing to get a feel of the market without investing a lot of capital.

There are learn online tutorials that a beginner trader can read even before opening a real account, and to get extra practice in trading before opening a live account - a beginner trader should open a practice practice demo trade account with a online broker - so as to practice placing trade positions before opening a real/live account and investing with real money.

During the training period using the practice demo trading account, the beginner will learn the key factors needed to succeed in forex such as: education, equity management, trading plan & systems.

The trading strategies and skills needed for these two account types are basically the same. The skills and strategies for the standard account or micro account match up. The only change is in money management rules for each account type.

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